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Look For 'Stronger Gold Price Into Year-End' - Analyst

(Kitco News) - The macro environment is finally set up in a way that favors gold prices, according to one analyst.

The two biggest factors that are likely to drive gold higher into the year-end are the Federal Reserve and the U.S.-China trade war truce, Metal Bulletin precious metals analyst Boris Mikanikrezai wrote in a Seeking Alpha post on Tuesday.

“The dovish turn of the Fed and the trade war truce are conducive to a stronger gold price into year-end,” Mikanikrezai wrote. “I expect gold prices to push still higher into year-end.”

Gold is already off to a good start this week, with the February Comex gold futures last trading at $1,244.40, up 0.14% on the day, after hitting a five-week high on Tuesday.

Mikanikrezai looks for gold to rally by the end of December, noting that he is especially bullish when it comes to the SPDR Gold MiniShares Trust (GLDM), which was launched in June.

“With most market participants positioned negatively on the gold market, the likelihood of a strong short-covering by year-end is elevated, in my view,” he said. “I am reasonably confident to hold that the net spec length should grow in the next 6 months, which will exert upward pressure on Comex gold spot prices.”

As the week progresses, Thursday should be a much more active trading day as the U.S. markets open following a national day of mourning the late President George H.W. Bush, according to Kitco’s senior technical analyst Jim Wyckoff.

“If the U.S. stock market continues to sell off—especially in volatile price action--gold and silver prices would likely see appreciation on safe-haven demand,” Wyckoff said. “The gold bulls and bears are on a level overall near-term technical playing field ... First resistance is seen at this week’s high of $1,247.50 and then at $1,252.00. First support is seen at today’s low of $1,238.70 and then at $1,235.00.”

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